Question

Relation between expansion path and cost function

Answer 1

The Relation between expansion path and cost function is as follows:

Explanation: There is a direct relationship between expansion path and cost function. It can be said that expansion path can't be defined without the cost aspect.

Expansion path as a line which reflects the least–cost method of producing different levels of output, while the factor prices remain constant. The points on an expansion path occur where the firm's cost curves, each showing fixed total input cost.

Answer 2

The expansion path is shown as a curve on the graph that shows the minimum cost involved  through the two inputs for producing different levels of output.

Explanation:

• The expansion path is normally reflected as a graph curve with different quantities of inputs which are shown on the axes. It is used to reflect the optimum level of combinations of input for increasing the levels of production.  
• When the manufacturer wants to produce a certain amount of products at minimum costs uses the the point on the expansion path that is also on the isoquant connected with that output level.
• The expansion path shows the production function of the firm on a long-run and can be used to create its long-run cost curves.

To know more about Expansion path

Discuss expansion path with the help of budget line and isoproduct curve.

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